ISLAMABAD: The Federal Constitutional Court (FCC) has upheld the increase in excise duty under the Balochistan Finance Act 2020 as constitutional and dismissed a petition filed by the Attock Cement challenging it.
A two-member FCC bench comprising Justice Aamer Farooq and Justice Rozi Khan Bareech announced the judgement, which had been reserved after a hearing on December 11, 2025. The petition contested a Balochistan High Court ruling from November 27, 2021.
The petitioner had sought to declare the 2020 amendment to the excise duty unconstitutional. The dispute began when the Mines Labour Welfare Department of Balochistan served Attock Cement a notice on January 15, 2021, demanding payment of excise duty on minerals at revised rates.
The company’s counsel argued before the apex court that the provincial assembly lacked the legislative competence to amend the Excise Duty on Minerals (Labour Welfare) Act, 1967 as the imposition of excise duty falls under the exclusive domain of the federal legislature.
In a 14-page judgment authored by Justice Aamer Farooq, the court ruled that the dominant purpose of the 1967 Act is the advancement of labour welfare — a subject constitutionally entrusted to the provinces. “The mechanism through which this objective is pursued is the imposition of a duty of excise... as a means carefully fashioned to finance a broader ‘public interest’,” the judgment stated.
The court noted that the statute establishes an administrative framework for the collection and use of proceeds specifically for labour welfare. “Thus, while the recovery of excise duty is the operative mechanism of the Act, its spirit, essential character and constitutional essence lie in the realisation of labour welfare,” it added.
The ruling further clarified that the legislation represents an overlap of federal and provincial powers — the federal authority to levy excise duty and the provincial responsibility for labour welfare. This constitutes a “double aspect” of legislative competence, with both aspects being constitutionally valid and operating in harmony.
Applying the doctrines of “pith and substance” and “cooperative federalism,” the court held that striking down such legislation would be a rigid approach inconsistent with the constitutional design post-18th Amendment. “In view of the foregoing discussion, the present petition stands dismissed and leave is accordingly refused. There shall be no order as to costs,” the judgment concluded.
Meanwhile, another three-member FCC bench, headed by Chief Justice Aminuddin Khan and comprising Justice Syed Hassan Azhar Rizvi and Justice Arshad Hussain, heard appeals filed by the Federal Board of Revenue (FBR) against rulings by the Sindh, Lahore and Islamabad high courts. The appeals challenge the legality of the super tax imposed through Section 4B of the Income Tax Ordinance, 2001.
Counsel for a private company, Mirza Mahmood Khan, argued that prior to 2010, shareholder companies were not subjected to such taxation. He contended that companies heavily reliant on bank loans—which account for up to 70 percent of their financing—end up operating at a loss after paying both government taxes and interest to banks.
Justice Rizvi questioned why these companies do not operate using their own capital. In response, the counsel argued that while reduced interest rates have aided small businesses, heavy taxation continues to deter stock market investors. He further stated that super tax is levied on gross income rather than profit, which can result in an effective tax rate as high as 67 percent for some entities. He urged the court to consider imposing tax only on actual profit.
Justice Rizvi remarked that investor-friendly policies are essential for encouraging investment, to which the counsel replied, “The government should not slaughter the entire goat just to obtain a single piece of meat.”
Following Mirza Mahmood Khan’s arguments, Khalid Javed Khan, counsel for Engro, presented his case. He noted that during the Covid-19 pandemic, all industries except pharmaceuticals were shut down.
Justice Rizvi pointed out that mask manufacturing units were also operational, to which the counsel responded that while some textile companies remained active, those that continued operations during the pandemic have not been taxed, whereas super tax has been imposed on other industries based on income brackets.
The court then adjourned the hearing until Wednesday, when Salman Akram Raja and Barrister Farogh Naseem, counsel for other companies, are scheduled to present their arguments.
